3. White Company is a manufacturer of gas (Product 1) and electric (Product 2) clothes dryers. The problem is to determine the optimal level of output for two products (1 and 2). Production consists of a machining process that takes raw materials and converts them into unassembled parts. These are then sent to one of two divisions for assembly into the final product Division 1 for Product 1 and Division 2 for Product 2. Product 1 requires 20 units of raw material and 5 hours of machine-processing time, whereas Product 2 requires 40 units of raw material and 2 hours of machine-processing time. During the period, 400 units of raw material and 40 hours of machine-processing time are available. The capacities of the two assembly divisions during the period are 6 and 9 units, respectively. The operating profit contribution per unit or, more accurately, the per-unit contribution to profit and overhead (fixed costs) is $100 for each unit of Product 1 and $60 for each unit of Product 2.
